Direct to Carrier vs. Working with a Freight Management Company
For many companies who ship material consistently, the choice of whether to work directly with the carrier or outsource freight management to a 3PL is one that greatly concerns operations managers. There are advantages associated with either option, however, you may find that it is more beneficial to employ the outsourcing strategy. Especially if your company is on the small side with limited resources.
The advantages of outsourcing include increased focus on core competencies, access to the latest and greatest in technology and big data analytics as well as access to outside expertise and experience.
There are many advantages to outsourcing freight management to a 3PL such as LTX. But even if you do not choose us as your supply chain partner we believe in supplying you with the information you need to make effective supply chain decisions.
For many companies, freight management is not a value-added activity. Every hour and dollar spent in negotiating with carriers, navigating the bid process and auditing/paying freight bills is taken away from your company’s core competencies. By core competencies, we refer to business activities that are a part of your company’s central value creation. If you are a manufacturing firm it is mass product creation, if you’re a fashion designer it is creating new and unique fashions. Managing freight transportation is not a part of your core competencies and takes time away from activities that are.
You could manage your freight transport yourself, but is the trade-off worth it? For many companies, the answer is no. Working with a 3PL allows companies to outsource their freight management to a knowledgeable and focused expert. This frees up companies to redirect resources to their core competencies which maximizes value creation. Think of it this way, would you rather make one call to your 3PL, or call all your carriers individually?
Outsourcing freight management to a reputable 3PL can give companies access to new and innovative technologies such as transportation management software (TMS) and big data analytic software. This technology can provide companies with in-depth insights into their logistics operations that they would have never had access to otherwise. These insights can help pinpoint problem areas within a company’s supply-chain as well as identify possible solutions. With these solutions, a company can start to see rapid improvements in their operations which could translate to increased bottom-line performance.
If a company wanted to use this technology without outsourcing they would have to either buy it, which can be very expensive or build it themselves in-house. Both options are cost-prohibitive and unrealistic for most companies. The best strategy to gain access to state of the art technology is to outsource to a reputable 3PL.
External Experience and Expertise
Outsourcing freight management to a reputable 3PL can also give companies access to a wealth of industry knowledge and expertise. Similarly, to the points above, this knowledge can lead to operational insights that normally would not be possible.
Many 3PLs have worked with a vast variety of clientele which translates into valuable experience. This experience allows 3PLs, such as LTX, to create unique freight management solutions, tailored to each of their clients’ specific needs. This type of flexibility can provide more value to a customer rather than a one-size-fits-all strategy.
If you are a company looking to outsource freight management to a 3PL, ask them about solutions that they could provide for your unique situation and needs. If they fumble over this question, perhaps it would be better to look elsewhere for freight management services.
It is not an easy decision to make when deciding whether to work directly with the carrier or outsource your freight management to a 3PL. There are many advantages to outsourcing, including a focus on core competencies, access to the latest and greatest in technology and big data analytics as well as access to outside expertise and experience. Before making this decision, you should examine all the advantages associated with each option as well as the details of your own unique processes and industry.
If you decide to outsource to a 3PL, take the time to consider LTX as an option for your freight management needs. LTX has over 100 years of combined experience within the transportation industry as well as access to the latest in technology. If you are interested in talking with us about your freight management options or any other topic within the transportation industry, contact us today!